TRAINING - eFarmerMac training. Here’s a list of the major activities involved in selling a ......

TRAI N I NG

Together, we strengthen

the financial position of

American agriculture and rural

communities. Our capital,

united with your commitment,

is a winning combination.

WELCOME

FARM & RANCH LOAN PURCHASEFARM & RANCH LOAN PURCHASE

Farm & Ranch Loan Purchase Solution

Access competitive, short and

long-term financing for farm operations,

rural properties, and production

agriculture. You originate and sell

eligible loans to us, secured by first

lien mortgages. You maintain the client

relationships. Preserve capital, attract

and retain customers, and minimize

credit and interest rate risk.

1 PROCESS OVERVIEW

2 PRODUCT GUIDE

3 UNDERWRIT ING MATRIX

6 APPL ICATION CHECKLIST

7 NARRATIVE

11 APPRAISAL GUIDE

12 TITLE GUIDE

13 RATE LOCK GUIDE

14 CLOSING GUIDE

15 F IELD SERVICER GUIDE

START HERE

1. REVIEW Product Guide, UnderwritingMatrix, and Daily Rate Sheet to assessproduct interest and eligibility.

2. GATHER the required informationaccording to the Application Checklist.

Include a complete Narrative with

your application package to ensure

prompt turnaround times.

3. COMPLETE a new application inAgPower and upload supportingdocuments using your assigned login.

Access AgPower at www.efarmermac.com.

Contact Client Services for assistance.

4. RECEIVE a credit decision generallywithin two business days.

Access your Preliminary Loan

Approval Notice within the AgPower

queue under “Documents.”

5. ORDER an appraisal andpreliminary title report accordingto the Appraisal and Title Guides.

6. SUBMIT appraisal and title reportsunder “Communication/Attachment”tab within AgPower.

Ensure the reports meet the terms

of engagement and first lien position

requirements.

7. RECEIVE the Conditions Prior toFunding via AgPower, once FarmerMac has assessed the appraisaland title work.

Farmer Mac issues a Closing

Instruction Letter to your assigned

Central Servicer (CS), who will

coordinate closing activities with you.

8. RATE LOCK by calling the RateLock Desk at 800.879.3276 between10 a.m. – 3 p.m. E.T., referring tothe Rate Lock Guide for instructions.

Have the Preliminary Loan Approval

Notice nearby when rate locking.

9. ASSEMBLE closing documents, whichmay be prepared by your organization,through an attorney, or through PPDocsInc. (ppdocs.com), according to theClosing Guide. Complete the “PurchaseRequest” tab in AgPower two businessdays prior to loan funding.

Work with the Central Servicer to

review documents, coordinate

closing, and finalize loan purchase.

10. PERFORM field servicing duties,which may include monitoring taxesand insurance, property inspections,filing UCC continuations, andcollecting annual financials, asdescribed in the Field Servicer Guide.

Central Servicer will bill and collect

payments; remitting field servicing fees

to you as payments are received.

Ready to submit a loan and don’t know where to begin?

We’ve got you covered.

FARM & RANCH PROCESS OVERVIEW

All guides and reference materials are located within the Resource Library at efarmermac.com/Resource

Lean on us to help get you started.

Call Client Services at 866.452.2617 for specialized training.

Here’s a list of the major activities involved in selling a

Farm & Ranch loan to Farmer Mac.

Review the Seller/Servicer Guide for a complete description of all obligations.

FMT001 ©11.16 1QUESTIONS? [email protected] | 866.452.2617 | farmermac.com

Fixed Rate Mortgages

10, 15, 20, 25, & 30-year fixed terms: fully amortized

7-year fixed term: 15 or 25-year amortization

15-year fixed term: 25-year amortization

Adjustable Rate Mortgages (ARM)AgEquity LIBOR

Revolving line of credit tied to real estate; 5 or 10-year draw option• Index = 30-day LIBOR as published in the Wall Street Journal,

rate adjusts monthly

1-Month ARM: 15-year maturity, 15 or 25-year amortization • Index = 30-day LIBOR, rate adjusts every month, or• Index = 1-month PRIME, rate adjusts every month

1, 3, & 5-year ARM: 15-year maturity, 15 or 25-year amortization • Index = Constant Maturity Treasury (CMT),

rate adjusts 1, 3, & 5-years respectively

7/1 & 10/1 ARM: 15-year maturity, 15 or 25-year amortization• Index = 1-year LIBOR, rate adjusts annually after the initial 7 or 10-year period

See Product Descriptions for index and reset margin information.

Variable Rate Mortgages (VRM)5-year VRM: 10, 15, 20 or 25-year maturity and amortization

• Index = Farmer Mac Cost of Funds, rate adjusts every 5 years This specific product carries a pre-payment penalty

10-year VRM: 15, 20, 25 or 30-year maturity and amortization• Index = Farmer Mac Cost of Funds, rate adjusts every 10 years

15-year VRM: 20, 25 or 30-year maturity and amortization• Index = Farmer Mac Cost of Funds, rate adjusts every 15 years

See Product Descriptions for index information.

WHAT’SOF F E R E D

Farmer Mac offers a wide menu of product options with various

amortizations and maturities. Let’s break it down. Your loan

product options include:

PREPAYMENT OPTIONS AND SCHEDULES

Products are fully pre-payable on any interest payment date without penalty, except the 5-year VRM

———

Any payment made other than on a regularly scheduled installment date (i.e. payment date) must be accompanied by pre-paid interest to the next installment date

Special principal payments must be received on or before the scheduled payment date and will only be applied after the scheduled payment amount has been satisfied

———

Monthly, semi-annual, and annual payment options available on most products

1 Annual payments due on January 1st

1 Semi-annual payments due on January and July 1st

1 Monthly payments due on the 1st of each month

1 Semi-annual interest-only payments for AgEquity loans during draw period

See Payment Schedule Guide in Resource Library for more information

Product Descriptions, conversion information, and Seller/Servicer requirements are available within the Resource Library at efarmermac.com.

FARM & RANCH PRODUCT GUIDE

Rate sheets are posted daily. Net yields are quoted and based on market conditions at the

time of posting. Actual yields may differ from those indicated.

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GET THESPECS

FARM & RANCH UNDERWRITING MATRIX

Loan Program Fast TrackFull

UnderwriteFull

Underwrite AgEquity RLOC AgAssist

Eligible Pricing Type Choice Standard Choice Standard Standard

Total Debt Coverage (See Seller/Servicer

Guide, Section 202.3)

≥ 1.00 for 2 year average

≥ 1.25 ≥ 1.50≥ 1.35; must meet TDC

after 3% rate shock≥ 1.10

Current Ratio ≥ 1.00 ≥ 1.25 ≥ 1.50 ≥ 1.25 ≥ 1.00

Debt to Asset ≤ 40% ≤ 50% ≤ 40% ≤ 50% ≤ 60%

Loan-to-Value ≤ 55%≤ $5 mil: < 70%*

>$5 mil: 60%≤ 60% ≤ 50%**

≤ 45% FAMC LTV≤ 85% CLTV

Credit Score ≥ 720 ≥ 680

Loan SizeNo minimum ≤ $1.5 mil

No minimum ≤ 1000 acres: $50.0 mil > 1000 acres: $12.9 mil

Minimum: $50,000 Maximum: $12.9 mil

No minimum ≤ 1000 acres: $50.0 mil > 1000 acres: $12.9 mil

Cash-Out (See Seller/Servicer

Guide, Section 202.5) Unlimited

≤ 25%; unlimited cash out if amortization is 15 years or less and

LTV is less than 60%.

Allowed if not for consumer purpose.

Unlimited

Recent Tax Returns 2 years Minimum 3 years; 4 years alternate bearing.

Extras Collateral must consist of at least 5 acres or be used to produce annual agricultural receipts of at least $5,000.

Permanent plantings are eligible.

*Max LTV = 60% for properties located in ND, SD, MN, IA, IL, IN, OH, MO, NE.

Max LTV = 60% Unlimited number of draws, minimum draw of $2,500.

2nd mortgage must be guaranteed by federal or state agency.

Loans with agricultural improvements whose contributory value exceeds 40% of the total value are not eligible.

*Loans with LTV > 60% and ≤ 70% must have TDC ≥ 1.50. No exceptions to Pro forma CR or D/A.

**Property may have improvements or permanent plantings, however the loan-to-value will be calculated using only the bare land value.

Guaranteed loan ≥ 25% of combined loan amounts.

When the contributory value of the agricultural producing structures and site improvements, as reported in the appraisal, exceeds 60% of the total appraised value, the loan is to be treated as a specialized production agricultural facility.

Dwellings, occupied by the applicant and considered to be the primary residence of the applicant, are not considered to be agricultural improvements for the purpose of determining the contributory value.

Aggregate Maximum Exposure

$50.0 mil

Eligible Borrowers

U.S. Citizen or a lawfully admitted alien to the U.S. who maintains a permanent residence in the U.S. or a corporate entity or partnership whose members, stockholders or partners holding a majority

interest in the corporate entity or partnership are citizens or lawfully admitted aliens

Trusts are eligible for Farmer Mac financing if there is a personal guarantee.

Family Living Expense $15,000 for each adult (over 18), $10,000 for each dependent listed on tax returns.

Rate ShockThe following products will need to meet TDC requirement for desired program after 3% rate shock;

AgEquity LIBOR, 1 month LIBOR, 1-year or 3-year product.

Exceptions Fast Track and Full Underwrite Choice programs have to meet all underwriting standards with no exceptions.

FMT003-03 ©2.18 QUESTIONS? [email protected] | 866.452.2617 | farmermac.com

Loan Program Seasoned Loan Cattle Feedlot Timber

Eligible Pricing Type Standard Standard Standard


Guide, Section 202.3)N/A ≥ 1.25

Current Ratio N/A ≥ 1.25

Debt to Asset N/A ≤ 50%

Loan-to-Value ≤ 60%*≤ $5 mil: < 65% > $5 mil: 60%

≤ $5 mil: < 70% > $5 mil: 60%

Credit Score N/A ≥ 680

Loan Size ≤ 1000 acres: $50.0 mil > 1000 acres: $12.9 mil


Guide, Section 202.5)≤ 5%: restricted to closing fees


$50.0 mil

Other *LTV based on the original (or most recent) appraisal.

Farmer Mac requires that the Seller be the feedlot’s operating lender unless the feedlot is not borrowing operating money.

For loans with a LTV > 60% and ≤ 70%, TDC must be ≥ 1.50x with no exceptions to pro forma debt to asset ratio and pro forma current ratio standards.

Maximum loan maturity is not to exceed 20 years when the improvement value is ≥ 60% of total value; 30 years when the improvement value is < 60% of total value.

A Collateral Assessment Report (CAR Form 1047) or a new appraisal is required.

A new Environmental Disclosure (Form 1010A) is required.

Maximum LTV = 60% for loans in ND, SD, MN, IA, IL, IN, OH, MO, NE

Applicant should have a production contract(s) and multiple sales outlets for their products. Contract(s) should be standard to the industry and assignable to FAMC. Counter party analysis is expected.

Loan must be held by Seller/Originator for a minimum of 5 years prior to FAMC purchase.

Loan has not been more than 30 days past due in the past 3 years. Loan has not had any material restructuring or modification within the past 5 years.

Three years of tax returns required.

For loans with a LTV > 60% and ≤ 65%, TDC must be ≥ 1.50x and no exceptions to pro forma debt to asset ratio and pro forma current ratio standards.

Loan purchase transaction of 30 yrs. must use either 10 or 15-yr. VRM loan product.

When the contributory value of the agricultural producing structures and site improvements, as reported in the appraisal, exceeds 60% of the total appraised value, the loan is to be treated as a specialized production agricultural facility.

As exposures to borrowers increase in amount, Farmer Mac expects the quality of the loan and supporting financial information and analysis will reflect the greater risk.

Additional Options


Loan ProgramPoultry Facility

Swine Facility

Feedlot Dairy Facility

Agribusiness & Other Production

Facilities

Eligible Pricing Type Standard Standard Standard Standard


Guide, Section 202.3)≥ 1.25 ≥ 1.35

Current Ratio ≥ 1.25

Debt to Asset ≤ 65% ≤ 60% ≤ 50%≤ 70% or

LTD/NW ≤ 80%

Loan-to-ValueNew Facilities ≤ 75%

Existing Facilities ≤ 65%New Facilities ≤ 75%

Existing Facilities ≤ 70%≤ $5 mil: < 65% > $5 mil: 60%

≤ 60%

Credit Score ≥ 680

Loan Size ≤ 1000 acres: $50.0 mil > 1000 acres: $12.9 mil


Guide, Section 202.5)≤ 5%: restricted to closing fees


$50.0 mil

Other Term/Amortization: 10 years existing, 15 years new Term/Am: 10-15 yearsShould reflect remaining economic life

For loans over $5 mil, review quality financial statements preferred.

Term: 10-15 yearsAm: 15 yearsShould reflect remaining economic life

Production Contract Required

Borrower must have a production contract with a processor insuring occupancy or use of the facility as an integrator. Contract must be standard to industry with payments assigned to FAMC.

Evidence of permits for waste disposal and herd occupancy for stated capacity usually required.

Services of the business or facility are used toward the physical transformation or storage of farm-gate products.

Contract finishing operations must have multiple integrators available.

Milk assignment usually required.

Secured by a first mortgage on a specialized agricultural processing facility, agricultural farm-gate product storage facility, or other property directly involved in production of a farm-gate product.

Three years of tax returns required.

Operation must conform to all environmental rules and regulations. Manure easement may be needed.

Subordinate liens for new construction will be allowed at loan closing as long as the total lien position does not exceed 90% of the value of the security (CLTV). See Seller/Servicer Guide – Section 205.4

As exposures to borrowers increase in amount, Farmer Mac expects the quality of the loan and supporting financial information and analysis will reflect the greater risk.

Additional Options


LET’S GET ORGANIZED

Application ChecklistFull

UnderwriteFast Track

1. Detailed Narrative (analysis of character, capital, capacity, collateral & condition)

2. Credit Report with credit score on each applicant

3. Current market value balance sheet(s) with schedules(including debt schedule) > input in AgPower

4. Pro forma balance sheet and schedules (including debt schedule) > input in AgPower

5. Previous three years (market value preferred, cost basis accepted)balance sheets and schedules > input & upload in AgPower

N/A

6. Tax Returns/Income Statements for previous three years or four years for alternatebearing crops (only two years required for Fast Track) > input & upload in AgPower

7. Pro forma income and expense > input in AgPower N/A

8. Verification of non-farm income (2 most recent paystubs or most recentW-2 for each applicant employed off-farm)

9. Written debt verifications from major lender(s) of the borrower(if not on the Credit Report)

10. Written mortgage verifications outlining outstanding principal balance andpayment history (at least last 24 months); or two most recent 1098’s for eachmortgage not in the Credit Report

11. Verification of cash, savings, cash value life insurance, marketable bonds andsecurities, and retirement accounts if material to the credit

Ready to submit a loan to Farmer Mac? Here we go…

1 Prepare and/or collect the following information outlined in the checklist below.

2 Sign in to efarmermac.com and locate AgPower.

3 Click “Add New Application” and complete all necessary fields – all tabs for all applicants.

Don’t forget to input the use of loan proceeds, including lender(s) being refinanced, improvements being completed, etc.

4 Farmer Mac will underwrite the loan using one of two methods:

Full Underwrite – Refer to the Underwriting Matrix for a list of all underwriting standards

OR

Fast Track – A reduced documentation and Choice pricing option, designed for stronger credits

• Maximum loan amount ≤ $1.5 million• 2 yr. average Total Debt Coverage ≥ 1.00• Pro forma Current Ratio ≥ 1.00• Pro forma Debt to Asset Leverage Ratio ≤ 40%• Maximum Loan-to-Value is 55%• Credit Score ≥ 720

FARM & RANCH APPLICATION CHECKLIST

Live AgPower Demonstrations – one-on-one and group trainings available.

Farmer Mac Client Services is available at 866.452.2617 and [email protected] for support.

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Date: Originator/Seller:

Borrower Name(s): Additional Borrowers/Guarantors:Operating Lender (if known):Existing Relationship: Yes No Existing loan(s) and loan number(s):

Additional Loan Request*

If there is a second loan related to this loan request, please complete the following: *For three or more related loans, please download and complete another Narrative form, page 1.

Loan Request Details

Loan Program (i.e. Full Underwrite): Estimated Loan-to-Value: Loan Amount:Desired Loan Product(s):Amortization (years): 10 15 20 25 30 Term (years): 7 10 15 20 25 30

Payment Frequency: Semi-annual Annual Monthly

Source & Use of Funds

Total source of funds should equal total use of funds. Attach additional exhibits or descriptions to supplement as needed.

Loan Request Details

Loan Program (i.e. Full Underwrite): Estimated Loan-to-Value: Loan Amount:Desired Loan Product(s):Amortization (years): 10 15 20 25 30 Term (years): 7 10 15 20 25 30

Payment Frequency: Semi-annual Annual Monthly

LET’S TALK DETAILS

FARM & RANCH NARRATIVE

Farm & Ranch loans must include a complete narrative. For your convenience, please consider the

use of this Narrative form to ensure all necessary loan detail is captured. Substitutions are accepted,

provided that loan details are addressed.

FMT005-02 ©7.17 QUESTIONS? [email protected] | 866.452.2617 | farmermac.com

Sources Uses

Description Amount Description Amount

Total: $ Total: $

7

FMT005-02 ©7.17

Please describe the following:

BackgroundDiscuss the scope of operation and risk management strategies. For example…

• How many acres are owned and how manyrented? Detail acres farmed, crops planted, yields,etc. For livestock operations explain number headand weight. Explain how the borrowers managetheir risk and their marketing plan.

• Price Risk Management: How is the crop generallymarketed—open to the market, contracted, use ofoptions and hedges? What type of crop insurancedo they carry? Other methods for managing risk?

• If the borrower(s) have any off-farm income, statetheir occupation and where they work, for how long,and the likelihood of continued employment.

• Explain any changes that have taken place inthe operation historically and projected in thefuture. For troubled years, please explain whattook place and why.

• Provide detailed historical yield and priceinformation.

Operational Overview & Global AnalysisDescribe the legal entity(s), ownership structure, and percentage of ownership. Capture all entities, sub-entities, and related entities, even those that are not party to the transaction. An organizational chart may be included, but is not necessary.

• If the borrower(s) own 10% or more of any non-signing entity, the most recent tax return andbalance statement need to be uploaded andspread on the Subsidiary Analysis tab of AgPower.

• Discuss each subsidiary entity in detail includingthe scope of operation, borrower’s share of theentity, other owners not part of the loan request,and the business purpose of the entity.

• Annual payment obligations will need to beidentified. Detail the change in the borrower’scredit ratios when consolidated with thesubsidiary entity and include debt payment.

Loan Purpose/Source & Use of FundsDescribe the loan purpose. If use of proceeds is for cash out or improvements, please explain. Also, describe any additional transactions that may be taking place (e.g. if your institution or another institution is involved in a different transaction that is occurring at the same time).

NARRATIVE DETAI LS CONTINUED

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FMT005-02 ©7.17


Character • State if the borrowers are U.S. Citizens (if not

explain how they will be eligible for a FarmerMac loan).

• Discuss the credit history and credit score oneach individual borrower. Explain any latepayments, judgments, and derogatory items.

• What is your history with the borrower(s)?Have they always handled accounts as agreed?

• Discuss borrower’s financial management andcredit history.

Capital • Discuss amount/quality of working capital and

changes over the review period. Discuss thegeneral type of term financing on the balance sheet(equipment vs. real estate) and any notable termstructures that might create cash flow issues in thenear future.

• Reconcile the pro forma net worth to the currentbalance sheet’s net worth. Explain all changesmade to the pro forma balance sheet.

• If the loan is a full underwrite or AgEquity,historical balance sheets should be spread onthe Loan Summary tab in AgPower. Please explainthe historical trends and ratios and make thenecessary adjustments to the earnings trend forthe real estate appreciation or any other items thatneed to be adjusted.

• Who is their operating lender? How is theirrelationship? What are the terms and conditions oftheir line of credit?

Capacity• State the years of tax returns provided for

each borrower.

• Discuss source, quality, and volatilityof cash flow.

• Discuss the historical average cash flowavailable and total debt coverage ratio (TDC).

• Discuss items that were backed out as non-recurring.

• Discuss anything that appears to be abnormalor extraordinary when reviewing the historicalspreads. Explain if the operation is stable orchanging. Explain any variances in historicalcash flow available.

• If a pro forma cash flow is required, provide thedetails, including but not limited to the yields,prices, acres, commodities, etc. The pro formais to be completed on an all-in all-out basiswithout an accrual adjustment.



FMT005-02 ©7.17


Collateral Analysis• Describe size, nature, quality and conditions or

limiting factors underlying the value of the property.

• State the estimated market value and the loan-to-value for the Farmer Mac loan. Detail the acres ofcollateral and how many acres are tillable.

• Describe the location of the collateral including thelegal and physical access to the property. Discussthe marketability and desirability of the property.

• Detail any improvements on the property andtheir condition. Estimate the percentage of valuethe improvements will contribute to the overallproperty value.

• State whether or not the collateral serves as theborrower’s primary residence.

• Address water quality, availability and nature/reliability of water delivery. If the property isirrigated and is located within an irrigation district,provide detailed information about the irrigationdistrict, quantity, quality and cost of the irrigationwater. If it is not located within an irrigation district,state the source and location of the irrigation water.

• Detail any irrigation equipment that will bepledged as part of the collateral.

Conditions • List the borrower’s credit ratios as compared to

the Farmer Mac established credit ratios.

• Detail who will sign the Note and the Mortgage,and if the loan is to be cross-collateralized orcross-defaulted with another loan.

• If there are any leases, describe permits or otherassignments to be taken as part of the security.



PROPERTYINSIGHTS

1 The appraiser must be a State Certified General Appraiser OR if the highest and best use of the proposed security is a rural residential use property AND the property is improved with an existing residence with significant contributory value, a State Certified Residential Appraiser is acceptable.

2 The Appraisal Report Content Requirements (Form 1027A) defines the scope of work and expectations for appraisal report content.

TIP: Many originators attach this to their Engagement Letter as a means to share those expectations with the appraiser.

3 “Date of Value” in the appraisal must be less than 365 days prior to the date the loan is purchased by Farmer Mac.

4 The Collateral Valuation Supplement provides detail on our appraisal standards and guidelines. You are responsible for ensuring that the appraisal is conducted in accordance with Farmer Mac requirements. For preliminary loan approvals, the property value may be estimated.

5 Intended users of the appraisal must include, “Farmer Mac and its agents or assigns.”

Help us help you. The appraisal is instrumental to our understanding

of the loan security. It should include the physical, legal, and

economic characteristics of the property, the market’s attributes,

and the property’s income producing capacity and market value.

REQUIRED FORMS*:

Engagement Letter Form 1023A may be customized by the lender

Environmental DisclosureForm 1010A

Assumptions and Limiting ConditionsForm 1037

Irrigation/Drainage Supplement Form 1013A

only required when the property includes irrigation or drainage conditions that affect the value

* Equivalent forms may beused subject to prior approvalby Farmer Mac.

ADDITIONAL SUPPORT:

The Preferred Appraisal List (PAL) is a database of experienced appraisers who are familiar with our appraisal requirements.

Locate PAL within the “Preferred Appraiser” section at efarmermac.com

Locate current versions of all appraisal forms and guidelines within the Resource Library at efarmermac.com.

FARM & RANCH APPRAISAL GUIDE

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What’s Required?

• Farmer Mac requires title insurance in the form of a titleinsurance policy.

• If title insurance is not available or, in Farmer Mac’s determinationnot reasonably available, an opinion of title from an attorney maybe acceptable.

• Mortgage is a valid first lien and property is free and clear of allmechanics liens (or similar types) and is not subject to any claimsderiving from a preceding mortgage.

• If fixtures or personal property were assigned value, appropriatesecurity interest granting language (specific or blanket) must beincluded in the Mortgage/Deed of Trust/Security Deed, and astate level UCC must be filed to perfect the security interest in theproperty.

• One to four family residential commitments/policies are not acceptable.

What Else?

The title insurance company issuing the final title policy must have a rating of “A” or better by Demotech, Inc.

• Visit www.demotech.com and click on “Financial Stabilities

Ratings” to perform your search and view ratings.

• The state in which the property is located must be listed under thejurisdictions for the company that prepares the title work.

Title opinions from an attorney or firm must be rated at least “Martindale-Hubbell Distinguished” by Martindale-Hubbell (www.martindale.com) or approved by Farmer Mac.

SECURITYMATTERS

FARM & RANCH TITLE GUIDE

Refer to the Seller/Servicer Guide located in the Resource

Library at efarmermac.com, for further obligations.

IMPORTANT TIPS:

The title commitment or preliminary report should always be in the name of the lender/financial institution that the Note and Mortgage is going to be written on, and “its successors and/or assigns.”

U.S. Bank National Association as Custodian/Trustee for Farmer Mac. Referencing Farmer Mac (FAMC) or U.S. Bank National Association (USBNA) may result in the closing protection letter (CPL) being issued incorrectly on table funded loans.

———

The final title policy may show the lender/financial institution name listed on the Note and Mortgage (preferred method) OR* it may show “U.S. Bank National Association as Custodian/Trustee for Federal Agricultural Mortgage Corporation programs.”

* The key is that the policy effectivedate must be equal to or later than therecording date/time of the Mortgage(lender) or Assignment (U.S. Bank).

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For all refinances, be sure the vested property is listed in the “Borrower Info” tab in AgPower.

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LOCK IT DOWN

When to Rate Lock

Rate lock once the loan has been credit approved (a Preliminary Loan Approval Notice is issued) and Farmer Mac has assessed your title and appraisal reports. It’s recommended that all Conditions Prior to Funding are satisfied prior to rate lock.

• Once locked, mandatory delivery applies. A pair-offfee (1.00% to 1.25%) will apply to withdraw a ratelocked loan.

How to Rate Lock

Call the Farmer Mac Rate Lock Desk at 800.879.3276, between 10 a.m. - 3 p.m. E.T., Monday - Friday.

• Locate the Preliminary Loan Approval Notice,which includes the following details:

– Farmer Mac Loan Number

– Loan Terms (loan size, payment frequency,amortization, and product type)

• The rate lock commitment is issued by phone.Once locked, a rate lock confirmation is deliveredthrough the “Rate Lock Info” tab within AgPower(generally by end of business day).

• Contact the appointed Farmer Mac Administratorwithin your organization to ensure you have ratelock privileges.

Pricing the Loan

Refer to Farmer Mac daily rate sheets for available products and terms (located at efarmermac.com). Rates are indicative and change throughout the day based on market fluctuations.

• Price adjustments* to consider when computinga rate:

– Qualified Standard or Choice pricing (listed onPreliminary Loan Approval Notice)

– ABA or ICBA membership pricing (reduced rateson specific products)**

– 1, 4, or 8-week rate lock periods (contact theRate Lock Desk for price adjustment)

– Monthly, semi-annual, and annual payment

frequencies

– Add between 10 -150 basis points for fieldservicing, paid to seller over the life of the loanas payments are received(Max. 100 bps for AgEquity loans)

What Else?

• Any changes to the original loan terms must beresubmitted and approved by Farmer Mac Underwritingprior to the rate lock. No changes will be allowed oncethe loan is rate locked or at the time of rate lock.

• Rate lock extensions may be offered for a fee.Call the Rate Lock Desk for a quote.

• Rate lock extension fees will be deducted fromFarmer Mac’s wire disbursement at time of purchase.

* Adjustment amounts are detailed within the footnotes of therate sheets.

** Due to Farmer Mac’s relationship with American Bankers Association (ABA) and Independent Community Bankers Association (ICBA), discounted pricing is offered to members of these organizations. Refer to ABA and ICBA rate sheets for pricing.

Rate Lock Desk 800.879.327610 a.m. - 3 p.m. E.T. | Monday - Friday

QUESTIONS? [email protected] | 866.452.2617 | farmermac.com

FARM & RANCH RATE LOCK GUIDE

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How to build a rate

1

Net Yield

2

Standard or Choice

3

ABA or ICBA

6

Field Servicing

5

Payment Frequency

4

Rate LockPeriod

13

MAK INGI T E A S Y

Product Descriptions are located within the Resource Library at efarmermac.com and are terrific resources for understanding product requirements and attributes.

FARM & RANCH CLOSING GUIDE

Required Provisions

Farmer Mac requires specific Note and Mortgage provisions. Please review the Seller/Servicer Guide (Sections 206 & 304) for precise loan documentation requirements, representations, and warranties.

CLOSING & FUNDING WORK LIKE THIS:

1 Receive a Conditions Prior to Funding notice through AgPower.

2 Assigned Central Servicer receives a Closing Instruction Letter.

3 Work through Central Servicer on closing activities and requirements.

4 Complete the “Purchase Request” tab within AgPower at least two business days prior to loan closing.

5 Close the loan with a title company or at your institution.

6 Send original, signed and recorded loan documents, final title policy, and pertinent closing documents to Central Servicer.

Document Options

Generate loan documents in-house

using a reputable and compliant

document ordering system or have

documents prepared by an attorney

Order through PPDocs, Inc. | ppdocs.com

• $100 Express Service• ≥ $400 Full Service• Farmer Mac Provision & Product Compliant• See PPDocs Manual for ordering instructions

(located in Resource Library at efarmermac.com)

OR


Provision topics include, but not limited to:

• Note Endorsement & Mortgage Assignment Language

• Payment Application & Structures (Payment Schedule Guide available

within the Resource Library)

• Interest Accrual

• Interest on Early Prepayments and Payoffs

• Late Charges & Default Interest

• Financial Statement Collection

• Product specific functions and attributions

Insurance Requirements

• If the contributory value of the buildings or other insurable improvements exceeds 20% of the appraised value, all improvements must be insured

• When insurance is required, list the loss payee as, “U.S. Bank

National Association, as Custodian/

Trustee for Federal Agricultural

Mortgage Corporation programs

(in care of the Central Servicer or

Field Servicer as designated by the

Central Servicer)”

• Refer to the Seller/Servicer Guide section 401.4 for complete insurance requirements

Refer to the Seller/Servicer Guide, located at efarmermac.com/Resource, for detailed seller obligations.

SERV ICEIN ACTION

FARM & RANCH FIELD SERVICER GUIDE

What’s a Field Servicer?

As the Field Servicer, you will maintain a relationship with the borrower and perform a certain number of servicing activities, including but not limited to:

• Ensure borrower’s compliance with loandocuments and terms

• Monitor status of taxes and insurance

• File all necessary UCC financing statements,amendments, and continuation statements,if applicable

• Inspect property, upon request

• Obtain annual financials, upon request

• Serve as primary contact for borrower issues(other than payment & billing questions)

• Work closely with borrower to resolve delinquencyissues (coordinated with Central Servicer)

• Maintain a file of field servicing activities,findings, and communications

What’s the Process?

CS sends report to FS

1 CS outlines loan data, field servicing requirements, and fee income, etc.

1 CS collects payments and remits field servicing fee to FS

1 CS engages FS on servicing actions as needed

FS reviews report and responds to CS

1 FS updates report to confirm taxes and insurance are current

1 FS provides updated financials and inspection reports upon request

1 FS communicates any known material changes affecting the collateral

1 FS submits servicing requests to CS, such as partial releases, subordinations, easements, and conversions

Servicing is an important and collaborative effort between you, the Field Servicer,

and the Central Servicer. Periodic reporting and frequent communication are an effective

combination. Here’s the game plan…

Central Servicer = CS Field Servicer = FS

Getting Paid

The Field Servicer is paid over the life of the loan as payments are collected. The Central Servicer will bill and collect payments and remit the field servicing fee to you upon receipt. Reports will be provided to show current loan balances and pertinent loan information.

QUESTIONS? [email protected] | 866.452.2617 | farmermac.comFMT010 ©11.16 15

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